While crude oil prices have declined 27 percent since Oct. 1, natural gas prices broke through the $4 barrier this week for the first time in four years.
On the crude oil side, worldwide demand has declined while supplies have increased.
Crude oil production in the U.S., Saudi Arabia and Russia reached some of their highest levels in history last month, offsetting supply losses from Iran and Venezuela.
Saudi Arabia announced that it would cut exports by 500,000 barrels per day (bpd) in December, and it is working with OPEC+, which is the new organization that includes some non-OPEC members such as Russia, to cut about 1 million bpd of production.
The Energy Information Administration (EIA) said this week OPEC production for 2018 and 2019 will be revised up by 60,000 bpd to 39.1 million bpd.
U.S. oil production also increased to 11.4 million bpd.
U.S. commercial crude oil inventories increased for the sixth consecutive week from Sept. 21 through Oct. 26, and pushed the U.S. inventories higher than their five-year (2013-17) average. U.S. crude oil inventories are forecast to increase from 421 million barrels in 2018 to 472 million barrels in 2019, putting more downward pressure on domestic oil prices, according to EIA.
EIA also expects global inventories as reported by the Organization for Economic Cooperation and Development (OECD) to surpass their five-year average and climb to near the top of the five-year range in 2019.
EIA forecasts the Brent crude oil price will average $72 per barrel in 2019, which is $3 per barrel lower than previously forecasted, and forecasts the WTI crude oil price to average $65 per barrel in 2019, which is $5 lower than previously forecasted. The lower price forecasts are partly the result of higher than expected crude oil production, contributing to global crude oil inventory growth and put downward pressure on crude oil prices.
Slowing demand growth in China and other countries, the decline in the stock market, and the rising value of the dollar are some of the factors that have decreased future demand predictions.
The U.S. average regular gasoline retail price decreased about 7 cents from last week to $2.686 per gallon on Nov. 5, up about 20 cents from the same time last year.
The U.S. average diesel fuel price decreased nearly 2 cents from last week to $3.34 per gallon on Nov. 5, 46 cents higher than a year ago.
Natural gas futures settled at $4.837 million British thermal units, reaching its best level since December 2014 at $4.063 on New York Mercantile Exchange futures trading. Natural gas prices have increased 23 percent this month because of tight supplies and cold weather.
EIA says inventories are the lowest since November 2003.
Alex Mills is the former President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author.
